Definitions on Types of Mortgages Part 1

What’s a fixed rate mortgage - a mortgage for which equal monthly payments of interest and principal are paid over the life of the loan, usually for a term of 30 years.

Adjustable Rate Mortgage - a mortgage that provides for periodic changes in the interest rate, based on changing market condtions.

Options (Flexible Payment) ARMS - It is an adjustable rate mortgage on which the interest rate adjusts monthly and the payment adjusts annually. THe borrowers offers options on how large a payment they will make. The options include interest-only, and a “minimum” payment that may be less than the interest-only payment. The minimum payment option results in a growing loan balance, termed “negative amortization”.

Balloon Mortgage - A short-term mortgage in which small periodic payments are made until the completion of the term, at which time the balance is due as a single lump-sum payment.

One more for today -

Bi-Weekly, Bi-monthly, and Weekly Payment Mortgages - this pretty much what it says - payments on your mortgage with bi-weekly, bi-monthly or weekly. what we need to do is figure out what it does to the interest on your loan.

See you soon
Sharon